By: Donny Wise
April 13, 2010
Another casualty of our current banking system is the number of unbanked Americans that does not use a traditional checking or savings account. The unbanked are utilizing check cashing services to cash payroll checks and money orders/cash to pay bills, groceries, etc. The Bank On program is a program with origins in San Francisco in 2006 to mainstream banking services to the unbanked with partnering government, financial institutions, and community organizations. DC has become part of the initiative with the Bank on DC program that will assist the 37,000 unbanked with affordable access to mainstream banking services.
In construct of the program, the partner banks or credit union would be able to offer a low cost checking account with no minimum balance requirements. The account provides two features to insure a better chance of success and participation. First, the account has no courtesy overdraft to overdraw the account, and past checking account or credit history is not applicable to obtain the account. The program provides the appropriate criteria for success as documented in San Francisco with 40,000 accounts and with an average balance of approaching $1000. The affordability and accessibility opens the door to a segment of the population that is currently unable to access traditional banking services.
With the additional partnership of community associations, the partnerships with community organizations assist the unbanked in the transition and financial literacy training. The new customer has the opportunity to register for free money management classes during the account opening process at the partner bank or credit union.
In most initiatives and programs, good intentions are not followed by prudence objectives and criteria to meet the ultimate goal. A strong and healthy consumer in becoming financial stewards of personal makes the community and the economy strong. The Bank On program is the roadmap for the unbanked to become part of the banking community with access to traditional banking services. The recognition of the city of DC is appropriate for implementation of a program with so many benefits to the unbanked of the community.